What Happens If I Default on a Personal Loan?

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When is a personal loan in default?
Payment timing | Potential consequences |
---|---|
Immediately after you miss a payment. | Your loan is considered delinquent and you might owe late fees, but your missed payment probably won’t be reported to the credit bureaus yet. |
After 30 days. | Your lender may report your loan as delinquent to the credit bureaus. |
After 90 days. | Your lender will likely change your loan status from delinquent to default. |
After 120 to 180 days. | Your lender may “charge off” your loan, which means it no longer keeps it on its books, and transfer the account to a debt collector. A new collections account may appear on your credit report, which negatively affects your credit score. |
Personal loan default consequences
Lender programs to help you avoid default
Lender | Hardship options |
---|---|
Best Egg | Loan extensions, short-term and long-term reduced payment plans. |
LendingClub | Short-term reduced payments, interest-only payments or extended loan terms if you’re experiencing temporary hardship. APR reduction and term extensions if you’re facing permanent hardship. |
Prosper | Payment reduction, extended loan terms. |
Reach Financial | Payment deferral for up to 90 days if you can document financial hardship, options to split up payments over time or change payment schedule. |
SoFi | Forbearance if you’ve been laid off and you have a loan in good standing that you’ve had for at least nine months. |
What to do if you face loan default
Article sources
- 1. National Bureau of Economic Research. Prodigals and Projecture: An Economic History of Usury Laws in the United States from Colonial Times to 1900. Accessed May 2, 2025.
- 2. Federal Register. Federal Interest Rate Authority: A Rule by the Federal Deposit Insurance Corporation on 07/22/2020. Accessed May 2, 2025.
- 3. Federal Reserve Bank of St. Louis. Finance Rate on Personal Loans at Commercial Banks, 24 Month Loan. Accessed May 23, 2025.
- 4. Consumer Financial Protection Bureau. What Is a Debt Relief Program and How Do I Know if I Should Use One?. Accessed Jan 16, 2025.
- 5. Internal Revenue Service. Canceled debt – Is it taxable or not?. Accessed Apr 1, 2025.
- 6. National Credit Union Administration. Credit Union and Bank Rates 2024 Q4. Accessed May 23, 2025.
- 7. Federal Reserve. Military Lending Act. Accessed May 2, 2025.
- 8. Consumer Financial Protection Bureau. Consumer Use of Buy Now, Pay Later and Other Unsecured Debt. Accessed Jan 24, 2025.
- 9. Center for Responsible Lending. Unsafe Harbor: The Persistent Harms of High-Cost Installment Loans. Accessed May 2, 2025.
- 10. Internal Revenue Service. Retirement Topics - Plan Loans. Accessed Apr 8, 2025.
- 11. Internal Revenue Service. Retirement topics: Exceptions to tax on early distributions. Accessed Apr 8, 2025.
- 12. Administrative Office of the U.S. Courts. Bankruptcy Basics. Accessed Apr 8, 2025.
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